From April 1, 2019, Making Tax Digital for VAT requires VAT registered businesses with taxable turnover above the VAT registration threshold (currently £85,000) to keep records in digital form and file their VAT Returns using software.
The Making Tax Digital rules apply from your first VAT period starting on or after 1 April 2019. Businesses with taxable turnover above the VAT registration threshold will no longer be able to submit their VAT returns using the HMRC website.
There are more rules and regulations, including the need to keep digital records, which you can read about in HMRC VAT Notice 700/22 but these are the headline changes.
So what does MTD for VAT mean for most businesses?
We’ve been advising businesses for almost two decades to use proper accounting software and ditch the spreadsheets and paper records. This is because accounting software does the job you need, helping you with:
It’s never been cheaper or easier to use than it is today whether you adopt a cloud-based solution or desktop software.
All of the cloud-based accounting solutions claim to be compatible with MTD but if you’ve been using desktop software for many years you may need to upgrade to the latest version for MTD compatibility.
Earlier in 2018 we helped two businesses transition from spreadsheet accounting to using a cloud accounting solution. They both have six-figure turnover so I was amazed they were still using spreadsheets. In one case it was what their accountant offered 🙁
Essentially, you buy the software, pick a date to start from (ideally the start of your financial year) and off you go! That said, it’s probably not a good idea to do it yourself. You can outsource much of the bookkeeping but at the very least get help from someone who knows the software.
You don’t want to be the guy who said “I stopped doing my books when I realised I was making them worse!”
As for the paper – up to date accounting software allows you to store documents, such as invoices, expense claims, receipts etc. as PDF documents as part of a transaction. Let your accounting software be your filing cabinet!
Visit our dedicated cloud accounting service page to learn more about how we can help you leave the spreadsheets and move to cloud accounting.
All businesses are different and VAT rules can be complex so before you dive in get some advice from your accountant or HMRC to make sure you are applying the VAT rules correctly.
That said, our overall view is simple – start using good accounting software as soon as you can and check that your existing software is compatible with MTD for VAT.
If you think we can help you – please give me a call on 020 7125 0270.
Or, visit our VAT Services page to learn more about we can clear up any confusion on Making Tax Digital.
Michael
@diaryofanomb
Sales | Margins | Profit | Cashflow
We don’t believe in forms, we believe in talking to people, finding out your needs and tailor-making a solution just for you.
Give us a ring on 020 7125 0270 or email us at info@bluedotconsulting.co.uk
“Michael and the Blue Dot team have been an essential part of our journey from startup through to being an established company, and we look forward to continuing working together long into the future. They have always been on hand to offer support and sound advice whenever it is needed.”
“Blue Dot have been our accountants and bookkeepers since the very beginning of our business, and have been nothing short of outstanding throughout.”
“Blue Dot Consulting went above and beyond in helping us navigate not only the transition to cloud-based accounting but also in leading our accounts team through a broader period of transformation.
Their deep understanding of our unique needs and challenges was evident from the outset. They provided unwavering support to our team, ensuring they felt confident and well-prepared for the changes ahead.”
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Michael was fantastic. He quizzed me on how my business worked financially and was super patient with me. Explaining everything in a non-accountancy manner. He then showed me how to utilise all the less obvious tools in the program, which he continues to do, so that I can see immediately what monies held belonged to my company and what is held for clients. I now do my own VAT returns and payroll because of his help and continued support.”
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“Michael’s straightforward, practical and tailor-made approach was perfect for me and our business.”
“Blue Dot have been our accountants and bookkeepers since the very beginning of our business, and have been nothing short of outstanding throughout.”
